My Company

Last July, I decided to become my own number one client -- I opened a financial services branch in the worst market downturn ever. Could my timing have been worse? I had wanted to start a blog about my experiences (and I might still), but the first few months were so brutal, I literally could not think of a single positive thing to say. Finally, I do have some positive things that have worked for me and might help your business. Here are a few lessons, I learned (and relearned) the hard way.

Clients are scared. Fearful clients can't make the decision to move. They are the proverbial deer in the headlights. All the wonderful charts about recovering markets, buying at the bottom, and the importance of staying the course do not have any impact on them. Clearly, certain clients could not make this decision (to move their finances to us) logically. They were operating solely out of fear.

It took a number of meetings to see what was happening. I was presenting fabulous financial plans, clearly laying out our powerful differentiation, only to have the client move a little bit of money, or, worse, decide to stay with their long-term advisor. This was true even though the previous advisor had done a terrible job, and the client was clearly going to run out of money in retirement.

My takeaways for dealing with the fearful client:

First, I allow more time for each meeting -- a lot more time. Ten years ago, I could do an initial meeting in one-and-a half to two hours. Today, it sometimes takes (gulp) three. (I allow two, but they frequently run over.) Plan presentation meetings can take twice as long as they did before the crash.

Clients need to feel relaxed and safe. They have a lot of questions that must be resolved before they decide to move ahead. I slow down my own internal clock that is moving at a very high speed. This is the hardest part of the process. I was once told I had the metabolism of a hummingbird. Becoming calm is essential. I exude serenity and am very patient with all their questions. The subconscious message: I have all the time in the world for you. You are my number one focus.

By the way, if you have ever heard me speak, you will know that exuding serenity has taken me some time to master.

Second, I now end each meeting with the same question: "Do you have any questions or concerns?" It is very important to ask about their concerns. It is amazing what clients will tell me. Sometimes they have a favorite stock that they don't want to part with for sentimental reasons. No problem. We discuss the pros and cons of keeping it, and if they want to hang on to it, I just have them sign a statement that acknowledges we are not managing that part of their portfolio.

Whatever their issue, we discuss it thoroughly. I don't let them leave until they feel satisfied and at peace. When I ask that question again: "Do you have any other questions or concerns?" They will eventually answer "no." At this point, I can schedule the next meeting and usher them out.

Third, I weave into every initial meeting something they are all thinking, but afraid to ask: "How can I be sure you are not going to Madoff my money?" My answer: "Madoff both had custody and managed clients' money. That is the same as giving Butch Cassidy and Sundance the key to the bank vault. We don't have custody and we use a trusted third party to manage the money. We custody at a separate firm, Schwab, that is a well-respected company that has never been involved in any Ponzi Schemes. All checks are either made out to the BD, Fund Company or Schwab. The checks are never made out to me." I don't have any way of accessing or stealing their funds; neither does the money manager.

Fourth, our meeting notes become more important than ever. We send out detailed notes after each meeting. Yes, it takes me time, but it does seem to help clients get over their fears and feel more at ease. If they have questions, they can refer back to their notes before calling us.

Fifth, for mid-market clients, particularly those who have lost their jobs, we try to make every plan revenue-neutral. By that, I mean we don't make clients try to come up with a lot of additional monthly savings, even though it would significantly improve their retirement picture. They simply can't do it. Yes, it would be better if they could, but right now, it is out of the question. In this case, we look at organizing and repositioning current assets, and working within their current savings parameters. Frequently, they have money all over town and it doesn't match their goals or their risk tolerance. We help consolidate and coordinate their portfolio so it matches their goals. This has really helped clients make the decision to move to us. It isn't costing them anything they weren't already paying. For the immediate future, they don't have to come up with any new money until their personal picture improves.

Sixth, I am much more cautious about taking on new clients. When we first opened our office, I felt like I could work with anyone who walked in. In fact, at some level, I felt it was my duty to help them. Yes, it's true, I have never met a client whose financial live I couldn't make a little better. However, I no longer take on anyone who can fog the mirror -- they have to be a good fit for us.

Now, I explain at the beginning of the initial meeting that our firm is not a fit for everyone. I also state that by the end of the meeting I will know whether they are a fit for us and they will know if we are a fit for them. Although I don't state this directly. I am interviewing our clients. This is an audition. If it appears that they will never be able to take action due to their fears, or they have unreasonable expectations, I answer all their questions and send them on their way. I don't even offer to take them on as clients.

In short, one of the great lessons I have learned over the last seven months is to only take on clients you really, really like, and who appreciate what you do. This means you are not going to work every day. You are going to play.

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About the Author

According to Kaplan Press, Katherine Vessenes is “America’s Leading Authority on Building the Multimillion-Dollar Practice.”
Katherine takes topics that can often be complicated and boring--like compliance, practice management, life insurance or marketing systems--and makes them easy to un... More